Slide 1: Q4 2016 Earnings Presentation
Q4 2016 EARNINGS PRESENTATION February 2, 2017
Slide 2: Disclaimer
Disclaimer Forward Looking Statements This presentation may contain forward looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “expect,” “anticipate,” “may,” “intends,
Slide 3: Overview and Highlights
Overview and Highlights • Q4’16 U.S. GAAP EPS of $0.21 down (30.0)% from Q4’15, and 2016 U.S. GAAP EPS of $1.05 down (18.6)% from 2015 • Q4'16 ENI per share of $0.33 up 10.0% versus $0.30 in the prior-year quarter, and 2016 ENI per share of $1.21 down (2.4)% from 2015 ENI per share of $1.24, partial
Slide 4: Growth Strategy
Growth Strategy OMAM's multi-boutique model is well positioned for growth, with four key areas of focus... Four Key Multi-Boutique Value Proposition Drives Growth Areas New Incremental Growth Opportunities Partnerships Global Distribution Collaborative Organic Growth (Growth and Seed / Co-Investment
Slide 5: AUM Progression and Mix
AUM Progression and Mix AUM Progression (Annual) AUM Mix (12/31/16) AUM $B .2% % Change: 13 AUM by Affiliate $B %Total $260 $8.8 $240 $20.8 $ 75.0 31% $220 4.1% 92.3 39% $200 $(1.6) 9.8% 5.2 2% $240.4 $180 $212.4 (0.7)% 5.1 2% $160 31.2 13% $140 Market and Acquisition of 2015 Net flows other Landmar
Slide 6: Net Client Cash Flows and Revenue Impact
Net Client Cash Flows and Revenue Impact AUM Net Client Cash Flows (“NCCF”) Revenue Impact of NCCF(1) $B $M $3.8 $4 $3.6 $20.0 $20 $19.1 $3.1 $18.4 $2.4 $14.6 $15 $13.5 $2 $1.5 $11.3 $0.8 $10 $7.3 $0 $5 $(0.2) $0.7 $(1.0) $0 -$2 -$5 $(3.0) $(3.4) $(2.5) $(2.6) $(2.9) $(3.2) $(6.6) $(7.5) -$4 -$10 Q1
Slide 7: Net Client Cash Flows Breakdown
Net Client Cash Flows Breakdown AUM Net Client Cash Flows (“NCCF”) - by Asset Class Revenue Impact of NCCF - by Asset Class $B $M $5 $20 $4 $16 $1.6 $12.7 $3 $2.6 50 $12 $6.1 $2 $1.8 $0.7 $8 $0.2 $1 $0.2 $1.2 41 $0.8 $0.7 $0.7 $0.8 $6.2 $4 $1.2 $8.1 $0 $(0.4) $3.0 $3.9 $3.2 $(1.7) 25 $2.1 -$1 $(1.9)
Slide 8: Competitive Long-term Investment Performance
Competitive Long-term Investment Performance Products representing ≥ 55% of revenue outperforming on a 3- and 5-year basis Commentary • OMAM uses revenue-weighted performance as its primary investment metric ◦ Ties investment performance to business performance ◦ Reflects percent of management fee r
Slide 9: OMAM Growth Strategies Generating Flows
OMAM Growth Strategies Generating Flows $3.4 Collaborative Organic Growth Global Distribution Initiative $B Seed Capital: Sales of Seeded Products $B Growth Capital: Sales of Products Related to $B Mandates Funded by Global Distribution(2) OMAM Strategic Initiatives $5.0 $2.0 $1.8 $5.5 $6.0 $3.8 $3.
Slide 10: Contribution of Growth Strategies to Flows: 2012 - 2016
Contribution of Growth Strategies to Flows: 2012 - 2016 Commentary • Successful seeding program is contributing meaningfully to sales • Global Distribution contributed $2.0 billion of funded assets in 2016 • Investment in new product initiatives at early stage, but already generating results Source
Slide 11: Diversified Sources of Flows - 2016
Diversified Sources of Flows - 2016 Commentary • Organic growth across a wide range of Affiliates and products • Significant sales diversification as top-5 selling strategies represent only 42% of gross sales and are generated by four different Affiliates Gross Sales ($B) Top Five Products # Product
Slide 12: Financial Highlights – Q4 2016 v. Q4 2015
Financial Highlights – Q4 2016 v. Q4 2015 • Q4’16 economic net income up 6.6% to $38.9 million ($0.33 per share) from $36.5 million ($0.30 per share) in Q4’15 ◦ Higher management fees and lower effective tax rate enhance results • ENI Revenue increase of $22.9 million, or 13.7%, to $189.8 million in
Slide 13: Increasing Results in a Volatile Year
Increasing Results in a Volatile Year $190 Average AUM ENI Revenue(1) Pre-tax ENI $153 % Change Q4'15 to Q4'16: 14% Performance Performance % Change Q4'15 to Q4'16: 10% Fees % Change Q4'15 to Q4'16: 2% Fees $250 % Change ex. perf. fees: 15% $70 $235 $210 $190 % Change ex. perf. fees: 5% $228 $167 $1
Slide 14: A Solid Record of Growth
A Solid Record of Growth Average AUM ENI Revenue(1)(5) Pre-tax ENI(5) Performance Performance CAGR ('12-'16): 11% CAGR ('12-'16): 11% CAGR ('12-'16): 10% Fees Fees $221 $223 $210 $250 $225 $800 $664 $679 $204 $204 $200 $178 1% $635 $191 $200 $175 $600 $528 $153 $148 $451 2% (6)% $150 $150 $131 $125
Slide 15: Management Fee Growth Driven by Higher Fee Global/non-U.S. Assets and Alternatives
Management Fee Growth Driven by Higher Fee Global/non-U.S. Assets and Alternatives(1) Average AUM and Fee Rate by Asset Class Gross Management Fee Revenue by Asset Class Avg. AUM % Change: 9.6% $B % Change $M % Change % Change: 13.7% $235.2 36.1 $240 34.7 $250 $214.6 $46.7 (20%) $213.4 44 50 27% $20
Slide 16: Expenses Increased Primarily Due to Landmark Acquisition
Expenses Increased Primarily Due to Landmark Acquisition Commentary • Total ENI operating expenses reflect Affiliate operating expenses, Center expenses and key initiatives, including Global Distribution (excluding variable compensation) • Q4’16 Operating Expense Ratio(2) declined to 40.4% for the p
Slide 17: Variable Compensation in Line with Business Profitability
Variable Compensation in Line with Business Profitability Commentary • Variable compensation typically awarded based on contractual percentage (e.g., ~25 – 35%) of each Affiliate’s ENI earnings before variable compensation, plus Center bonuses ◦ Affiliate variable compensation includes cash and equi
Slide 18: Affiliate Key Employee Distribution Ratio is Likely to Increase
Affiliate Key Employee Distribution Ratio is Likely to Increase Commentary • Represents employees’ share of profit from their respective Affiliates, ranging from 15 - 40%, in some cases following an initial preference to OMAM(1) • Q4'16 Key Employee Distributions increased due to higher ENI operatin
Slide 19: Balance Sheet Management Provides Multiple Opportunities to Benefit Shareholders
Balance Sheet Management Provides Multiple Opportunities to Benefit Shareholders Balance Sheet Capital ($M) December 31, December 31, • $392 million in third party borrowings at 12/31/16 2016 2015 Assets ◦ Up from $90 million at 12/31/15 due to $400 Cash and cash equivalents $ 101.9 $ 135.9 million
Slide 20: Appendix
Appendix gQ OMAM 20
Slide 21: Reconciliation: GAAP to ENI and Adjusted EBITDA
Reconciliation: GAAP to ENI and Adjusted EBITDA Three Months Ended Years Ended December 31, December 31, ENI Adjustments $m 2016 2015 2016 2015 i.1 Exclude non-cash expenses representing U.S. GAAP net income attributable to controlling interests $ 25.3 $ 36.9 $ 126.4 $ 155.5 changes in the value of
Slide 22: Reconciliation: GAAP to ENI and Components of ENI
Reconciliation: GAAP to ENI and Components of ENI Components of ENI revenue ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Management fees(1) $ 181.4 $ 157.0 $ 659.9 $ 637.2 (2) Performance fees 4.5 6.3 2.6 13.7 Other income, including equity-acc
Slide 23: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP operating expense to ENI operating expense ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 U.S. GAAP operating expense $ 156.2 $ 122.5 $ 507.9 $ 508.1 Less: items excluded from economic net income Acquisition-
Slide 24: Reconciliation: GAAP to ENI
Reconciliation: GAAP to ENI U.S. GAAP general and administrative expense to ENI general and administrative expense ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 U.S. GAAP general and administrative expense $ 26.6 $ 22.2 $ 98.3 $ 88.2 Sales-based
Slide 25: Calculation of ENI Effective Tax Rate
Calculation of ENI Effective Tax Rate Calculation of ENI Effective Tax Rate ($ in millions) Three Months Ended December 31, Twelve Months Ended December 31, 2016 2015 2016 2015 Pre-tax economic net income(1) $ 50.5 $ 49.3 $ 190.7 $ 203.5 Intercompany interest expense deductible for U.S. tax purposes
Slide 26: Definitions and Additional Notes
Definitions and Additional Notes References to “OMAM” or the “Company” refer to OM Asset Management plc; references to the “Parent” or “Old Mutual” refer to Old Mutual plc; references to "Landmark" refer to Landmark Partners, LLC, acquired by the Company in August 2016. OMAM operates its business th
Slide 27: Definitions and Additional Notes
Definitions and Additional Notes The Company adjusts its income tax expense to reflect any tax impact of its ENI adjustments. Please see Slide 21 for a reconciliation of U.S. GAAP net income to economic net income. Adjusted EBITDA Adjusted EBITDA is defined as economic net income before interest, in
Slide 28: Definitions and Additional Notes
Definitions and Additional Notes ENI earnings before variable compensation ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense. ENI variable compensation ratio The ENI variable compensation ratio is calculated as variable compensation divided by ENI ear